A Model Y vehicle on display at a Tesla flagship store in Shanghai, China on Jan. 4, 2021.
Gao Yuwen | Visual China Group | Getty Images
Citing national security concerns, China is restricting the use of Tesla’s electric vehicles by some government and military workers, according to a report in the Wall Street Journal on Friday. A separate report from Bloomberg said the cars were banned in certain areas.
Tesla’s shares fell more than 4.4% at one point Friday morning.
It came after the country conducted a vehicle security check which reportedly found that Tesla’s sensors were able to record images of their surrounding locations. The journal quoted people familiar with the matter, adding that Tesla could get important data, such as when and where the cars are being used. According to the report, more personal information, such as a cell phone’s contact list, could also be captured when it is connected to the car.
China is ultimately concerned the information could be sent back to the US, according to the Journal article.
The Chinese Ministry of Defense did not immediately respond to a request for comment.
Tesla’s automated driving functions such as Navigate on Autopilot are based more on cameras than on the systems of competitors. Elon Musk, CEO of Tesla, dismissed lidar (light distance and detection sensors) as too expensive and unnecessary for autonomous systems.
According to analysis by JL Warren Capital, Tesla’s Model 3 and Model Y in China captured approximately 13% of the electric vehicle market share in China in the first two months of 2021.
Tesla faces increasing competition in China, even when it comes to features like Navigate on Autopilot. JL Warren founder and CEO Junheng Li said Xpeng (XPEV) is the first Chinese automaker to use Nvidia hardware to develop advanced driver assistance software in-house. The system is considered equivalent in the country, ahead of equivalent products from Nio and Tesla.
On Thursday, SAIC Motor, China’s largest automaker, announced plans to develop automated propulsion systems using lidar sensors and software from Luminar Technologies
Tesla’s sales in China more than doubled last year to $ 6.66 billion, 21% of the total of $ 31.54 billion. In 2019, Tesla had sales of $ 2.98 billion in China, which is only 12% of its total sales of $ 24.58 billion.
Tesla didn’t immediately respond to a request for comment.
Read the full Wall Street Journal report here.
CNBC’s Lora Kolodny contributed to this report.
